Wholesale B2B refers to selling products to another business, in bulk and at a discount. This market is massive, reaching $698 billion in the US in July 2022 alone—a 16.1% increase from the same time last year.
Not to mention, B2B or wholesale ecommerce grew 1.17 times faster than the growth in all US manufacturing and distribution sales, with 15.2% year-over-year growth.
Brands like Your Super, Public Goods, and Bark are leading the way in the pivot from DTC-only to a DTC and wholesale hybrid. Bark, for example, credited inflated advertising costs as a reason for the change in direction.
The benefits are clear: higher order volume, less time spent on manual entry and admin tasks, and lower customer acquisition costs. So, how can you take advantage of the action? This guide will walk you through how wholesale ecommerce works, how to find the right sales channel, and tips for running your B2B business.
Table of Contents:
- What is wholesale B2B ecommerce?
- How wholesale B2B ecommerce works
- The benefits of selling wholesale
- How to sell wholesale to B2B customers
What is wholesale B2B ecommerce?
B2B wholesale refers to the business-to-business model where companies sell goods or services in bulk to other businesses rather than individual consumers. It involves selling products at discounted prices to retailers, distributors, or other businesses for resale or internal use. B2B wholesale transactions involves larger quantities, negotiated pricing, and partnerships.
How wholesale B2B ecommerce works
The most common type of wholesale is between producers (you) and retailers. However, there are wholesalers who sell to other wholesalers, and wholesalers—like Costco, for example—who sell directly to consumers.
Wholesale is often thought of as a traditional sales channel with a less than ideal buying experience. But technology and changing B2B buyer behavior has driven a change in wholesale ecommerce.
Today, retail ecommerce businesses are selling wholesale to drive growth, without enormous capital investment or high risk. With the right B2B ecommerce platform, merchants considering going into wholesale on a large or small scale can automate the process from signup to checkout, offer wholesale-specific pricing, and more.
Without a doubt, the biggest myth in wholesale is that the self-service ordering model used in retail won’t work in a B2B setting. As in retail, business customers benefit greatly from the time and effort savings of online ordering, in their own time, with full visibility of the status of their order.”
—Ben Chidiac, co-founder of Beard & Blade
The benefits of selling wholesale online
It’s long thought that B2B customers shunned digital channels. Traditional wisdom held that buying wholesale was too complex to be conducted online, which is why so many suppliers haven’t made an investment in ecommerce just yet.
Recent research from McKinsey reveals that the B2B buyer has changed. The availability of information through digital channels has made it easier for them to collect information independently. Wholesalers have fewer opportunities to influence buyers’ decisions in person.
Technology like Shopify has made it easier for wholesalers to sell online and to take advantage of the following benefits:
- Improves the buyer experience. Modern wholesale customers are armed with information and don’t always need to speak to a representative before purchasing. Ecommerce can help wholesalers anticipate buyers’ needs, aid the buyers’ research process, and guarantee they can easily access content throughout.
- Automates wholesale processes. From signup to checkout, you’ll spend less time managing orders over the phone and email and more time on the strategic needs of your business.
- Lowers the cost of doing business. By selling items in bulk, you get to take advantage of larger orders and less marketing spend, which generally leads to making more money per unit. Shipping in bulk to fewer customers can also lower fulfillment and operational costs.
- Easily enter new markets. You’ll also be marketing to a new audience that’s never heard of you. When an established retailer teams up with your business, you can leverage its supply chain to reduce risk and lower setup costs. Wholesalers also save money on marketing by getting access to the retailer’s existing customer base.
The way that you build a modern brand, in our opinion, is that you have to be in as many touch points as possible, especially because there's more dropshipping brands than ever. There are more brands that pop up every day. And there's validity to being in stores.”
- —Jon Shanahan, co-founder and Chief Marketing Officer at Stryx
How to sell wholesale to B2B customers
1. Choose a wholesale sales channel
The first step in opening a wholesale operation is to choose the sales channel you’ll use to connect, sell, and fulfill wholesale orders. Let’s break down three of the most common.
Password-protected online storefront
Wholesalers often feel an online presence isn’t suitable for them because of the complex B2B buying process. Concerns over contract pricing, product exclusivity, and customers with special terms and conditions discourage the adoption of ecommerce.
While these are valid concerns, the right wholesale ecommerce platform can help overcome these challenges and drive business growth. You can easily create a private B2B ecommerce website with all the information a client needs, rather than have them reach out for basic information.
When designing your wholesale ecommerce website, Jesse Teske, VP of performance marketing at ThinkWarwick, says, “Don’t think that your website should cater to all audiences. When you know your audience, tailor the experience to them to maximize profits for wholesale. This means understanding what features your customers really care about.
“Do they need the bells and whistles that the average consumer needs? Do they need interactive guides and tools to help them find the products, or do they just want a clean interface, straightforward pricing, and support when they need it?”
B2B wholesale marketplaces
When B2B buyers were asked which sales channels they'd be open to purchasing through, wholesale marketplaces were on-par with supplier-branded ecommerce stores. Some 60% of buyers would spend money with a business via wholesale marketplaces like:
The biggest advantage of selling merchandise through an online wholesale marketplace is the large pool of potential buyers ready to buy your products. Hundreds of thousands of retailers across the globe buy wholesale products through Faire. Uploading your product catalog to a marketplace like this allows you to streamline your selling process and connect with new buyers in different markets that are already buying through the platform. You can get started with Faire by installing the Faire: Sell Wholesale app.
However, when you’re selling wholesale on marketplaces, the platform takes a percentage of your sales in fees. You’re also at the mercy of their terms and conditions, and it’s more difficult to deliver DTC-style experiences more B2B customers want.
The key to success with marketplace commerce is to diversify with alternative sales channels. Don’t let a large percentage of your wholesale orders come from a marketplace that will always have ultimate control over what and how you sell to B2B customers.
A few years ago, trade shows were one of the best ways to pitch yourself to retailers that attend events looking for new products to stock in their own stores.
While the COVID-19 pandemic grinded the industry to a halt, the B2B trade show market is expected to be worth $22.3 million by 2023. That beats pre-pandemic levels, hence why all wholesale businesses say trade shows are still relevant.
Take it from Luke Lee, CEO of Palaleather, who says, “In addition to marketplaces, we also sell through our own website and attend trade shows to reach potential wholesale buyers.
“We chose them because it allows us to have more control over our branding and messaging, as well as being able to develop personal relationships with buyers. It also helps diversify our sales channels, creating a more robust and stable revenue stream.”
Make the most out of your trade show attendance by collecting the details of your potential customers. Use DTC-style marketing tactics, such as email carts, to follow up with attendees post-event. Email a copy of the products they were interested in, with a personalized checkout link for them to create a wholesale account and place their first order.
2. Create your wholesale pricing strategy
Although you’re selling products at a lower wholesale price than you would to consumers, be wary of sabotaging profit margins by offering too good of a deal to B2B buyers.
To get a ballpark figure for your wholesale prices, first calculate how much it costs to manufacture each unit. Include extra operational costs in this figure, such as materials, shipping, handling, and labor. Multiply that figure by two to get your wholesale price and retain a 50% profit margin on wholesale orders.
Once you’ve set the wholesale price your buyers will pay for each unit, set your suggested retail price (SRP)—the dollar amount any reseller needs to sell your product to an end customer for.
A SRP sets clear boundaries with your wholesale customers so they can’t undercut you on price. It also helps build and maintain brand equity. If you’re selling luxury goods and a retailer undercuts your SRP by 30%, for example, customers are less likely to view the brand as luxury and exclusive.
Look at the pricing strategy you’ve used for B2C when determining your wholesale SRP. Let’s say a pair of sneakers costs $13 to produce, but when selling through your DTC storefront, the same pair of sneakers retail for $49.99.
Set the wholesale price for each unit at $26 and the RSP as $44.99. Everyone involved benefits; you keep a 50% profit margin for wholesale orders. When those retailers follow your SRP, they keep a 42% margin.
3. Set minimum order quantities and volumes
Wholesale customers get products at lower than RRP because they bulk order products. Make sure new B2B customers meet this threshold by setting minimum order values, such as:
- Minimum order quantity (MOQ). The minimum number of units a B2B buyer needs to order each time they purchase.
- Minimum order volume (MOV). The minimum a wholesale customer needs to spend on each order.
The best minimums for your wholesale business depends on your profit margins. Consider the cost of goods, the price of shipping items in bulk, and any other fees baked into wholesale ecommerce (such as payment processing fees.)
Let’s put that into practice and say it costs you a minimum of $30 to ship items in bulk. The smallest shipping box fits 50 units. Each unit costs $1.35, and the wholesale price of each one is $2.50.
Set your MOQ to 50 units and your MOV to $125. That way, you’re guaranteed to net a minimum of $182.50 in profit for each wholesale order—and prevent bulk shipping fees from eating into profits on low value orders.
Selling in wholesale quantities allows you to charge lower prices since your costs are also lower and a lower price usually means more sales. It also boosts the customer lifetime value and helps you build up the credibility of your brand.”
—James Bellis, founder of Balance Coffee
If it’s feasible, consider offering lower MOQ and MOV for wholesale B2B customers making their first order. Reducing the barrier to entry makes purchases more accessible to smaller businesses unsure on the return on investment of their wholesale order.
4. Select flexible wholesale payment terms
B2B customers don’t have the cash to pay for wholesale orders upfront. Many are cash-flow poor and need to generate a profit on the items they’ve ordered prior to paying the manufacturer for them.
As Sophie Gibson, PR and communications assistant at S’wheat, says, “Some business-to-business customers look for credit arrangements, which allow them to pay after they have received the goods, for example, net 30 days from delivery. I would recommend establishing if you can offer this type of agreement and any documentation you may need in order to do so.”
Use a B2B ecommerce platform like Shopify to set flexible payment terms for wholesale customers only. Allow B2B customers to pay post-delivery, and send automatic payment reminders when their invoices are due.
Although it’ll be the same platform powering both your B2B and B2C ecommerce websites, only corporate buyers can see wholesale prices, payment terms, and B2B payment methods once they’re signed into a company profile.
The number one myth is that businesses only want to buy with credit cards when, in reality, they like to use many types of payment options. You need to have multiple payment methods, including ACH/echeck, debit and credit, digital wallet, email/text payments (P2P), and even cryptocurrency.”
—Renzo Costarella, Business Development at Flint
5. Streamline wholesale logistics
Moving into a new country or territory comes with its own set of logistical challenges. Wholesalers can take that weight for you, but there’s still the challenge of shipping large quantities of stock to wholesale customers.
Jurrien Swarts, co-founder and CEO of Stojo, says, “In terms of logistics, you’ll need to make sure everything is shipped in retail-ready packaging, and that the master and inner cartons are sized, and labeled appropriately for each retailer’s specific requirements.
“You’ll have to be OK with paying your manufacturer upfront and then waiting 120 to 180 days to receive payment from some of your customers,” Jurrien adds. “In the case of national retailers, you have to be prepared to buy back items that don’t sell or that get damaged. You’ll also need more robust operations behind the scenes that can integrate with bigger retailers’ EDI ordering systems.”
Other ways to streamline the wholesale logistics process include using a real-time multichannel inventory management system. Jurrien Swarts says Stojo has “run out of inventory a lot. It happens especially to small brands that are running DTC and wholesale concurrently. One channel will outperform the other and then you’re always low on inventory.”
It’s also worth considering outsourcing order fulfillment to a third-party logistics partner (3PL). Ship your inventory to the international warehouse closest to your wholesale customers, and have your 3PL act as the distributor to pick, pack, and ship wholesale orders to your B2B customers.
“The back-end logistics are very different for wholesale compared to DTC, but you have to be good at both, and you have to have a 3PL that can do both,” says Jon Shanahan, co-founder and Chief Marketing Officer at Stryx. “I don’t know a single person that could handle a wholesale channel if they were fulfilling orders themselves.”
6. Run a B2B marketing campaign
You know how you’ll sell products as a wholesaler, the minimum order quantities a B2B customer needs to meet, and the process for shipping items in bulk. Next, you need to build a B2B sales pipeline that drives a steady stream of wholesale customers your way.
Get creative with marketing, partner up with communities where your buyers hang out, [and] set up affiliate relationships with relevant business services and tools.”
—Michael Martocci, founder of SwagUp
Business buyers are looking for DTC-style marketing experiences on channels like social media. Instead of reserving trade shows as the only way to build B2B relationships, Gartner reports almost half of B2B buyers use social media to learn about available solutions. Four in 10 use it to compare solutions, and 35% use it for need-to-know information before they complete a purchase.
Tomer Tagrin, CEO of Yotpo, says, “There’s a myth that user-generated content doesn’t matter in wholesale or B2B. In reality, customer content is the cornerstone of all ecommerce marketing activities—from SEO to paid acquisition and more.”
“Every part of the customer journey today is impacted by customer content, and this will only be truer in the future. It’s a must not just to collect customer reviews and photos, but to use them throughout the buyer journey.
“Customer content improves organic traffic as well as CTRs on social and Google Ads,” Tomer adds. “Plus, it offers a wealth of data that you can use to better understand your shoppers to build a stronger brand that truly caters to them.”
Don’t get trapped in the ‘If you build it, they will come’ mentality. You have to go out there and hustle: on the phone, at trade shows, and in person at stores. Simply being live and visible in the digital space isn’t enough unless you push your brand in the real world.”
—James Brooks, CFO and founder of The Elephant Pants
7. Prioritize B2B customer retention
Deliver an excellent customer experience for wholesale buyers and they’re likely to make repeat orders through your B2B ecommerce site.
As Simon Slade, founder of SaleHoo, says, “When it comes to wholesale, relationships are everything. This means that your customer service has to be more than just above average—it has to be out of this world.
“Customer service is the foundation for building excellent relationships with your customers, so make that foundation strong and impressive,” Simon says. “Ultimately, you’ll be better off competing to have the best customer service than trying to have the most affordable products. Focus your energy on providing well-trained customer service reps and lots of perks.”
Employ a team of B2B sales reps to prioritize customer support and retention. Have them:
- Deliver information on how to best market your products
- Share industry knowledge, such as emerging trends or customer preferences
- Give sneak peaks at upcoming inventory to create a sense of exclusivity and excitement
Unfortunately, things do go wrong. The supply chain industry is in disarray, and more products are out of stock than ever before. These issues directly impact retailers stocking your products in their own stores.
Apologize for any delays and go the extra mile to resolve issues your wholesale customers face—be that offering a better discount on their next B2B order, or extending your payment terms to give them more time between placing an order and selling each product. It plays on the service recovery paradox: you’ll build more goodwill by resolving B2B customer complaints than you would have if the experience had gone off without a hitch.
B2C is mostly reliant on direct response ads and social media content. B2B is more about relationships between the sales team and buyers at retail stores. We have a sales team who builds and nurtures those relationships.”
—Meredith Erin, CEO of Boredwalk
From wholesale to full scale with Shopify
Incorporating a wholesale channel into your business isn’t a decision to take lightly. Any user experience you’re delivering to your customers needs to be top notch, regardless of whether they’re the end consumer or a B2B buyer.
Luckily, ecommerce solutions like Shopify can help you deliver on those experiences—without the need for two complex (and expensive) back ends.
Use Shopify’s B2B ecommerce platform to:
- Design two online stores, DTC and wholesale, from a single ecommerce back end
- Manage inventory levels with one inventory management system
- Update product information across all sales channels with PIM, CRM, POS, and ERP integrations
- Create custom price lists and percentage discounts for specific customers or groups
- Automate and review customer signups
- Let customers purchase, track, and reorder products
- Review wholesale orders before invoicing
- Streamline inventory and order management
Wholesale Ecommerce FAQ
What is wholesale ecommerce?
Wholesale ecommerce is a B2B ecommerce model where you sell products in bulk and at a discount to other businesses rather than sell them to consumers individually.
Which platform is best for wholesale?
Shopify Plus is the best platform for B2B ecommerce. Create an incredible experience for both DTC and B2B customers while leveraging the global scale of Shopify’s ecommerce platform.
What is an example of a wholesaler?
Costco is the prime example of a wholesaler. Other retailers purchase products from Costco in bulk, at wholesale prices. They make a profit when reselling those products at RRP.
Can you use Shopify for wholesale?
Yes, Shopify offers first-party B2B features that are built directly into the admin. Choose between a blended B2B and DTC store, or a dedicated B2B-only store, and set price lists, payment terms, currency, and more for each B2B customer you sell to. You can also utilize Shopify’s most customizable features to enhance your store, including themes, discounts, API access, etc.
What features should I be looking for in a B2B ecommerce solution?
- Customer-specific pricing and price lists
- Product catalog
- Protected login
- Customer account view
- Branding and design options
- Easy, intuitive admin and customer experience